Madison homeowners who want to pay next year’s property taxes early, hoping to deduct them from their 2017 federal income taxes before the tax code changes and limits deductions for state and local taxes, are out of luck.
Wisconsin allows only very limited early payment of property taxes. By limited, that means no, there’s no way to pay the property tax bill issued in late 2018 before the end of 2017.
City Treasurer Dave Gawenda said Thursday that as the end of the year has approached, his office has been peppered with questions by phone and email from taxpayers — at least a half-dozen per hour on top of calls with more typical questions — asking whether they can pay their December 2018 property taxes now. His answer to them, a flat and firm “no,” is usually met with a groan, Gawenda said.
According to a memo sent to municipal clerks and treasurers last week by the state Department of Revenue, advance payment of property taxes — before levies are set in early November — can only be made after Aug. 1 of that tax year. Gawenda said those payments also are limited to the amount that was paid for property taxes during the prior year.
Thus, “pre-payment of 2018 taxes may be made from Aug. 1, 2018, to Dec. 17, 2018,” the DOR’s memo states. “Property owners cannot pre-pay December 2018 taxes at this time.”
Under the tax overhaul signed into law this month by President Donald Trump, which starts with the 2018 tax year, people can deduct only up to $10,000 in combined state and local taxes, including property taxes, on their federal tax return. Some states and municipalities allow taxpayers to pre-pay property taxes for the following year, so many are doing that, to take advantage of the deduction while they can.
Those who pay less than $10,000 in state and local taxes likely would not have seen any benefit to paying their December 2018 property taxes early.
On Wednesday, the Internal Revenue Service said that the only people who could pay their 2018 property taxes in 2017 are those who know the exact amount they will have to pay.
In Wisconsin, Gawenda said, that’s nobody, since local governments don’t set their tax levies until their budgets are approved next November.
Even so, Gawenda said, regardless of how one feels about the policy implications of the tax overhaul, the timing of the bill left states and municipalities with no time to react, and no time to update their systems so that municipal treasurers could separate taxes paid for 2017 and 2018, should the state have had the opportunity to change the law in time for property tax season.
“The way the tax system works,” he said, “the system will only accept payments for the current year. We’d have to do a system rewrite.
“If they had done this earlier in the year,” Gawenda said, “the Legislature might have had the opportunity to change the law.”